E*TRADE Review

E*TRADE was one of the original online brokers, and after its acquisition by Morgan Stanley it has settled into a specific identity that the “solid all-rounder” label tends to blur. The headline most reviews lead with — $0 commissions, big-bank backing, two platforms — is accurate but generic. The thing that actually decides whether E*TRADE is the right pick is narrower: it’s a strong options-and-active-trading broker with one notable hole for everyday investors.

The strength is Power E*TRADE, a genuinely capable, browser-based platform built for derivatives and active traders, free with any account. The hole is that E*TRADE doesn’t offer fractional shares, and its default cash sweep, like most big brokers’, pays little. So E*TRADE rates a 4.5 — excellent if you trade options or want a serious free platform, a step behind Fidelity or Schwab if you’re a small-balance, buy-and-hold investor who wants to put every dollar to work.

Who E*TRADE is for — and who should look elsewhere

E*TRADE fits active traders and options traders especially well, thanks to Power E*TRADE’s tools and pricing tiers. It’s also a reasonable all-purpose broker for investors who want Morgan Stanley’s research and a polished web experience.

Look elsewhere if you’re a beginner investing small, regular amounts and want fractional shares to do it — Fidelity, Schwab (Stock Slices), or SoFi handle that and E*TRADE doesn’t. And if maximizing yield on idle cash automatically matters to you, Fidelity or Vanguard’s money-fund defaults beat E*TRADE’s sweep.

The cost story: free trades, sharp options pricing, watch the cash

Stocks and ETFs are $0. Options are $0.65 per contract, dropping to $0.50 for traders who place 30+ trades a quarter — competitive, and the volume break rewards exactly the active options trader E*TRADE courts. There’s also a “Dime Buyback” feature that waives the commission to close short options trading at ten cents or less, which genuinely helps options sellers manage tail risk without paying to exit. These are thoughtful touches aimed at a specific user.

Two cost cautions. First, like most large brokers (Fidelity excepted), E*TRADE’s default cash sweep pays a low rate, so idle cash won’t earn much unless you move it into a money market fund yourself. Second, the best options pricing requires hitting the quarterly trade count — casual options traders pay the standard $0.65. Fees & value scores 4.5.

Platforms and tools

This is E*TRADE’s real differentiator. Power E*TRADE is a professional-grade, browser-based platform with advanced charting, options analysis, spectral/strategy tools, and fast order entry — and it’s free. Alongside it, E*TRADE Web handles everyday investing cleanly, and the mobile apps are well-regarded. Backed by Morgan Stanley’s research, the overall toolset rivals anything in the category for an active trader. Platform & tools scores 4.6 — a hair behind Schwab’s thinkorswim, but clearly in the top tier.

What you can trade

Stocks, ETFs, options, mutual funds, bonds and fixed income, and futures. The conspicuous gap is no fractional shares, which makes it a weaker choice for small-dollar, recurring investing, and there’s no direct spot crypto. For an active trader the menu is strong; for a dollar-cost-averaging beginner, the missing fractional support is a real limitation. Tradable assets scores 4.4.

Regulation, trust, and safety

E*TRADE is regulated by the SEC and FINRA, with SIPC protection on brokerage accounts (up to $500,000 in securities, $250,000 cash) plus additional coverage, and it now sits inside Morgan Stanley, one of the largest financial institutions in the world. Founded in 1982 and battle-tested across decades, its institutional durability is excellent. Regulation & trust scores 4.7. The minor asterisk is integration-era quirks and the standard misaligned-incentive note on the low-yield cash sweep.

Support and the day-to-day

E*TRADE offers 24/7 phone support, branch access through Morgan Stanley, and chat — a solid support stack, if not quite Fidelity’s or Schwab’s in reputation. Account opening and funding are straightforward, and the platform’s polish helps newer users find their way. Support & experience scores 4.4.

Where E*TRADE falls short

• No fractional shares, a real drawback for small, recurring investing.
• Low-yield default cash sweep — you must move idle cash to a money fund yourself.
• Best options pricing ($0.50) requires 30+ trades per quarter; casual traders pay $0.65.
• Morgan Stanley ownership brings occasional legacy-integration quirks.

For the active or options trader E*TRADE is built around, none of these bite. For a hands-off small investor, the fractional-share gap especially does.

Why this score

The 4.5 is the weighted average of the category scores above. E*TRADE is carried by its platform — Power E*TRADE is a top-tier, free active-trading tool — and by Morgan Stanley-backed trust, while the no-fractional-shares gap and the low cash sweep hold the Fees and Assets categories just short of the leaders. The rating reflects a broker that’s excellent for one kind of user and merely fine for another.

What to watch

• Your idle cash, which won’t earn much in the default sweep — move it to a money fund.
• Your quarterly options volume, which determines whether you get $0.50 or $0.65 per contract.
• Any post-integration changes to platforms or pricing under Morgan Stanley.

Bottom line

E*TRADE is best understood not as a generic all-rounder but as an active-and-options trader’s broker with big-bank backing. Power E*TRADE is a genuinely strong, free platform, the options pricing rewards volume, and Morgan Stanley provides ballast. Just know its gaps — no fractional shares and a lazy default cash sweep — which make it a weaker fit for small-balance, set-it-and-forget-it investors. For its core user, that’s a well-earned 4.5.

Frequently asked questions

Is E*TRADE good for options trading? Yes — Power E*TRADE is one of the better free options platforms, with $0.65 per contract (or $0.50 at 30+ trades/quarter) and a “Dime Buyback” feature that waives commissions to close cheap short options.

Does E*TRADE offer fractional shares? No. That’s a notable gap if you want to invest small, recurring dollar amounts; Fidelity, Schwab, and SoFi do offer fractional shares.

Is E*TRADE owned by Morgan Stanley? Yes. E*TRADE operates as part of Morgan Stanley, which provides research and institutional backing.

Does E*TRADE pay good interest on cash? Not by default — the standard cash sweep pays a low rate, so you’d need to move idle cash into a money market fund yourself.

What can I trade at E*TRADE? Stocks, ETFs, options, mutual funds, bonds, and futures. No fractional shares and no direct spot crypto.

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Fees and account terms are current as of the “Broker data last verified” date shown above and change over time; confirm specifics on E*TRADE’s site before opening an account. This review is editorial opinion for informational and educational purposes only and is not investment advice. Trading and investing involve risk, including loss of principal.